New Delhi (Sputnik) — India and Iran have struck a key agreement that would allow them to skirt US sanctions on Iran that will come into effect on November 4 this year. Following a high-level meeting of an empowered committee on Thursday afternoon, the Indian government announced that it would make payments for oil shipments from Iran in rupees. Iran, in turn, could use these rupees to pay for imports from India.
India's Minister of Shipping Nitin Gadkari said that the Indian and Iranian banks that will be involved in the transactions have come to an understanding.
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"We hope that Iran oil payment concerns will ease in the next week. India will start paying for Iranian crude oil in rupees. Crude oil imports from Chabahar Port will also begin very soon," an official said after the meeting in New Delhi.
The empowered committee consists of India's finance minister, Arun Jaitley, Shipping Minister Nitin Gadkari, and Foreign Minister Sushma Swaraj.
Meanwhile, Iranian officials have said they will soon hold consultations with its port authority on the issue of handing over operations of the strategic Chabahar Port to an Indian company.
It was feared that India's oil imports from Iran would be affected from the end of August, as Iran had offered a 60-day credit period on oil sales to India, which meant payments for consignments lifted at the end of August would be due in November when the second tranche of American sanctions commences. However, data suggest that Indian refiners have not cut down on Iranian crude imports, thanks to shipping containers insured by Iranian companies.
India has promised to increase its crude oil imports from Iran from 205,000 barrels per day in 2017-18 to 396,000 barrels per day in 2018-19. Iranian heavy crude is priced 90 cents lower per barrel than Arabian medium, similar to Saudi crude, for its September shipments. Iran has also offered further price reductions to India, which is one of the world's largest crude importers.